The Australian Competition and Consumer Commission is ready, willing and able to conduct a regular review of the banking sector but only if this is rubber-stamped by government, says ACCC Chairman Rod Sims.
Speaking at the AFR Banking & Wealth Summit in Sydney on Wednesday, Sims (pictured) defended the ACCC against allegations it should be doing more as the regulatory agency best placed to be regularly considering the level of competition in Australia’s banking sector.
He reminded the audience that, in all sectors, the ACCC is first and foremost tasked with looking for breaches of the Competition and Consumer Act 2010 and not looking for structural issues that are impeding competition - although there is precedent for the competition watchdog to go further when asked to by government.
“David Coleman bashed us up quite significantly, if you read the report (Review of the Four Major Banks: First Report), he basically said that just watching out for breaches is one thing but you should be looking at whether there is sufficient competition in the banking sector as a market study,” he said.
“I hastily pointed out that the government had said the Productivity Commission should do a review of competition and I frankly think that is well overdue. We can’t do it unless government asks us to do it for two reason: we don’t have the money unless we are funded to do it and, secondly, only the government can enliven our information-gathering powers.
“But if the government wanted us to do it, we’d be very keen to do it. But it’s really their call.”
Clear competition concerns
In its third recommendation in the Review of the Four Major Banks: First Report, MP David Coleman’s House of Representatives Standing Committee on Economics suggested the ACCC would be well placed to make recommendations to the Treasurer every six months to improve competition in the banking sector.
“The committee finds it very surprising that no Australian government has completed a wholesale review of competition in the banking sector in recent times,” the report states.
“More surprising, however, is that despite the Australian Competition and Consumer Commission’s clear concerns about the level of banking competition, it has acknowledged not closely monitoring the sector because ‘the RBA, APRA and ASIC are ... observing the banks’.
“None of these regulators, however, have a clear mandate to promote competition in the financial sector. The ACCC does. This means that no regulatory agency is regularly considering the level of competition in Australia’s banking sector and whether change is required.”
While the committee endorsed the government’s decision to have the Productivity Commission periodically review financial sector competition, “it does not believe that structural reviews undertaken ‘as appropriate’ go far enough”.
In his keynote address to AFR Banking & Wealth Summit on Tuesday, Coleman called for the establishment of a permanent team within the ACCC to monitor systemic issues within the banking sector “every single day”.